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2016 (7) TMI 9 - AT - Income TaxAdoption of method of accounting - adoption of 8% of the construction cost under work-in-progress method - whether “Project Completion Method” adopted by the assessee is correct or “Percentage of Completion Method” adopted by the Assessing Officer is correct to determine the revenue and costs of a project? - Held that:- The mere fact that there does exist a method of accounting for profits of each year is no justification for rejecting an equally recognized method of accounting whereby the profits of the adventure/project are determined when the whole adventure/project is completed; being consistently followed by an assessee, without suffering from an infirmity/ defect calling for a rejection of the same for the reason that true/fair profits of the adventure/project being not deducible thereby. The Assessing Officer having not drawn any finding that the accounts of assessee suffer from any defect nor that from the method of accounting followed by assessee, true/correct profits of assessee cannot be deduced and the assessee having been following the "completed project" method consistently, which being a recognized method of accounting, the assessee's method of accounting cannot be rejected nor is there any justification for estimating assessee's profits of the year from the assessee's business activity of building construction by resorting to applying of percentage of profit to the work-in-progress of the year. In view of the above discussion, we set aside the orders of authorities below and direct the Assessing Officer to accept the method adopted by the assessee for all the assessment years. - Decided in favour of assessee Charging of interest under section 234A - Held that:- The interest under section 234A is chargeable from the date of expiry of the notice period given under section 153A to the date of completing the assessment under section 143(3) r.w.s. 153A of the Act.The interest under section 234B is to be levied only on the additional tax levied on the enhanced income determined under section 143(3) r.w.s. 153A of the Act. Therefore, the period of charging of interest should be from the date of determination of income under section 143(1) or 143(3) to the determination of enhanced income under section 143(3) r.w.s. 153A of the Act. Accordingly, the Assessing Officer is directed to verify the period of charging interest and decide the issue afresh. Accordingly, this ground of appeals filed by the assessee is allowed for statistical purposes.
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